They will have normal operating expenses, but they should also have a reserve fund for repairs. 

Does this amount paid to decrease mortgage consider against capital or against operation profit?

It just has to be operable with a low amount of work & additional funds required for you to stabilize. 

The 25% down payment is no problem for a conventional loan, but until it is occupied and operating well, I wanted to reach out to the BP Community to see what other expenses I need to account for right from the start until it's occupied.

I'm not a lawyer or an expert in asset protection so we'll just say that we're officially out of my depth on that topic :)It sounds like you've done very well so far, why not just keep doing what you've been doing, while leveraging experts to improve your business operations?

Reduces your availability on your credit profile and increases your debt load.

When evaluating a property, do you subtract Capex reserves from your operating cash flow when calculating cash on cash returns?

Yeah, I guess it isn't any different from what anyone who operates a normal business such as a Dominos franchise has to deal with.

Many are well represented by sellers & turnkey operators here on BiggerPockets.

You need to have a really strong operating agreement.